Romania: High-impact company insolvencies doubled in H1 2024 compared to 2023

The number of companies which initiated insolvency proceedings in the first half of the year increased to over 3,600, compared to 3,401 in the first six months of 2023. Out of these, 72 are high-impact companies, with assets of over EUR 1 million, compared to only 33 in the same period of last year, according to a CITR market report.

Regarding the number of restructuring applications via proceedings of arrangement with creditors, there were 71 applications in the first six months of the year, out of which 33 are in progress. 19 applications were filed by high-impact companies.

“It is important to understand that these high-impact companies are major contributors to our economy, and in order to help them, we must learn why they are in difficulty, and we need to make sure that both the mechanisms, and the mentality with which we approach them are adequate. The CITR team has identified five main factors which have caused their decline, namely liquidity problems and increasing operational costs, which caused increasing debts, decreasing demand and sales, and unprofitable management decisions,” said Paul-Dieter Cîrlănaru, CEO of CITR.

The main reasons why companies initiated insolvency proceedings in the first half of the year are: liquidity problems, increasing operational costs, accumulated debts, decreasing sales and demand and inadequate management decisions.

“In the following period, we will probably see a continuous increase in the number of restructuring measures, considering the resuming of the economic and regulatory context prior to the pandemic. Accessing restructuring facilities in due time is the difference between successful processes and those which unfortunately are implemented too late,” Paul-Dieter Cîrlănaru, CEO of CITR, concluded.

The most affected business sector in January-June 2024 were wholesale and retail, construction, processing industry, transportation and storage, hotels and restaurants.